3 Burning Questions: Emerging Trends in Logistics & Supply Chain With Ingka Group (IKEA)
The logistics and supply chain industry is subject to various external factors, including geopolitical tensions, economic downturns, and natural disasters – all of which can have a significant impact on operations. By staying informed about the latest trends and developments, companies can be better prepared to navigate these challenges and maintain their resilience.
In the latest episode of our new series “3 Burning Questions”, we sat down with Olafur Magnusson, Global Commercial & Supply Integration Manager of the INKGA Group (IKEA) to discuss the emerging trends in logistics and supply chain.
Our 3 burning questions for this particular session were as follows:
What was the one fulfillment challenge IKEA faced in 2022?
How do you envisage the future of logistics fulfillment and parcel delivery?
What are some trends and emerging technologies that you are most excited about?
Prefer to hear his full answers? Watch the full recording here!
What was the one fulfillment challenge IKEA faced in 2022?
According to Olafur, IKEA faced multiple fulfillment challenges in 2022, mainly due to a supply chain imbalance, which is crucial for effective fulfillment. In particular, they struggled to meet the high retail demand from January to April due to various factors, including a significant supply constraint affecting the entire industry, such as the ocean transit out of Asia.
At the start of the year, there was a high demand, but with inflation later on, the supply chain ended up with an overstock in just a few weeks. The Asia Pacific and Asia regions were less impacted by the imbalance compared to the rest of the world, as not all countries in Asia experienced the same ocean transport constraints that Europe and North America faced. The greatest imbalance was probably in North America due to long vendor lead times. Meanwhile in Europe, the disparity was severe in all aspects but had varying impacts on different locations.
How do you envisage the future of logistics fulfillment and parcel delivery?
Olafur believes that the future of fulfillment and parcel delivery will focus on individuals; companies need to concentrate more on people and society who are impacted by their company but are not customers or employees. Business operations must be optimized to boost efficiency and quality, for example, through the use of automation equipment that reduces packaging and waste. This kind of technology will affect transportation costs and other aspects of delivering quality products to customers. Sustainability will also be a major focus for businesses, with IKEA already making progress towards their goal of completely emission-free home deliveries by the end of 2025.
Moreover, Olafur also discussed the need to optimize all marketplaces to reduce transportation costs and improve lead times. They will need to deliver parcels efficiently, cheaply, and at a high standard by fully utilizing their entire network. To do this, some shops will be redesigned to serve multiple purposes and maximize space. As such, retailers should aim to discover a balanced way to satisfy all the needs of an omnichannel customer, as more customers are using home deliveries, online businesses, and parcel deliveries.
What are some trends and emerging technologies that you are most excited about?
#1 Artificial Intelligence (AI)
With the increasing complexity of the omnichannel reality, the use of AI in various supply chain components is becoming more important. IKEA is using demand sensing to predict the first three weeks, which has a significant effect on the entire supply chain.
#2 Goal-based Orchestration
Businesses are fully utilizing their fulfillment networks to function as a separate entity inside their network in the context of global-based orchestration. By combining everything to produce the best choice for a given client, businesses are aiming to achieve customer satisfaction and the lowest price.
#3 Reverse Flow
Effective reverse flow enables customers to return items into a unit that will refill their requirements. Connecting goods and services is important, so omnichannel companies can produce a much better customer experience.
#4 Faster Testing and Deployment
As marketplaces and consumers are evolving extremely quickly, businesses need to test and roll out products more quickly than ever before.
#5 Track and Trace (5G)
Thanks to 5G technology, tracking and tracing the proper customer communications will be much easier. Customers are placing more value on knowing precisely where their packages are going and when they will receive their packaging.
#6 Sustainability
The market for 3D paintings for spare parts and accessories for the house is thought to be very promising. Using 3D printing technology for used spare parts will help reduce waste and increase sustainability.
About Olafur Magnusson
Olafur Magnusson is a senior leader with more than 20 years of experience in working with retail logistics in Ingka Group (IKEA). He is currently the Global Manager of the Commercial Integration & Supply team, deeply involved in transforming an iconic retailer from cash and carry business model towards omnichannel retailing.
About Unpacking E-Commerce Logistics Series
Unpacking E-Commerce Logistics brings together some of the best experts in the e-commerce logistics and supply chain space to unpack key concepts from a variety of trending topics, ranging the use of Artificial Intelligence in the industry to embracing hyperlocal delivery in the e-commerce world. An integral part of this series are our “3 Burning Questions” interviews that zoom in on important industry sub-topics that we all want to know about.
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